New Kids On The Block: A Look At The New FocusShares ETFs

It may seem like a while ago, but the truth is it was in March that Scottrade entered the ETF game with its FocusShares lineup. That lineup includes 15 "me too" ETFs and at the end of November, FocusShares ETFs had a combined $79 million in assets under management, according to data from the National Stock Exchange. As we noted some FocusShares ETFs have flown under the radar. Maybe that shouldn't be the case. After all, Scottrade clients can trade the ETFs free of charge and to the credit of the new FocusShares ETFs, they really take the fight to SPDR ETFs and funds issued by Charles Schwab SCHW and Vanguard regarding cost. With that, let's look at five of the 15 FocusShares ETFs. The funds' inception dates are excluded because all came to market on March 30th. FocusShares Morningstar Small Cap Index ETF FOS Year-to-date performance: -10% Average volume: 2,860 Investor Appeal Grade: C. The premise behind the FocusShares Morningstar Small Cap Index ETF is by no means unique and assets under management of just $4.5 million speaks to that. However, FOS has an expense ratio of just 0.12%, which means the ETF has lower fees than the comparable iShares, Schwab, SPDR and Vanguard ETF. FocusShares Morningstar US Market ETF FMU Year-to-date performance: -4% Average volume: 14,640 Investor Appeal Grade: B. FMU earns a solid "B" because $12 million in AUM for a nine-month old ETF in this market environment isn't too shabby. Beyond that, the expense ratio of 0.05% is enough to make even Schwab and Vanguard blush. FocusShares Morningstar Enegy Index ETF FEG Year-to-date performance: -11% Average volume: 6,900 Investor Appeal Grade: B-. If not for only $4.4 million in AUM, that grade would be higher and we suspect that if more investors took a look at FEG that grade could be A-, not B-. FEG is a direct rival to the Energy Select Sector SPDR XLE, but FEG has the lower expense ratio AND the better performance in 2011. That's a nice combination investors should consider. FocusShares Morningstar Technology Index ETF FTQ Year-to-date performance: -5% Average volume: 2,200 Investor Appeal Grade: C-. There is just too much competition among tech ETFs for this fund to merit a higher grade at the moment. FTQ's expense ratio is lower than the comparable SPDR and Vanguard tech ETFs, but those ETFs have also outperformed FTQ this year. FocusShares Morningstar Financial Services ETF FFL Year-to-date performance: -17% Average volume: 2,060 Investor Appeal Grade: B-. In this case, $4 million in AUM for a new ETF littered with bank stocks is actually impressive. That's not endorsement to buy bank stocks or ETFs, but FFL definitely isn't the worst of the lost when it comes to financial services ETFs. A lower expense ratio than and outperformance of the Financial Select Sector SPDR XLF could mean FFL is worth considering for patient investors looking to bet on a rebound in financials.